UK and China seek to bury power plant spat with deeper finance ties

LONDON (Reuters) - Britain and China smoothed over a diplomatic spat on Thursday as top finance officials announced closer cooperation between stock exchanges in the two countries and other initiatives in the financial services sector.

Hinkley Point C nuclear power station site is seen near Bridgwater in Britain, September 14, 2016. REUTERS/Stefan Wermuth

British finance minister Philip Hammond met Chinese Vice Premier Ma Kai as part of efforts to shore up what the two governments have called a “golden era” in their relationship between the world’s second and fifth biggest economies.

A decision by Prime Minister Theresa May’s in July to delay approval of a partly-Chinese funded nuclear power project was criticised at the time by Beijing. May has since granted approval for the project.

As China gradually relaxes controls on its currency, Britain has developed close financial links with the country, hoping to use the City of London’s global status to tap into a potentially huge and lucrative market.

Hammond announced several financial initiatives including progress on a link between the London and Shanghai stock exchanges, the opening of Chinese financial firms’ offices in London, and a promised relaxation of rules to allow British firms to own higher stakes in parts of China’s financial sector.

“Our strategic collaborations ... are evidence of the continuing strength of this relationship,” Hammond said, speaking alongside Ma in London at the conclusion of annual talks on closer financial cooperation.

Although Britain is facing a long and complicated withdrawal from the European Union and an uncertain economic outlook, deputy finance minister Shi Yaobin said he expected to see a smooth transition and good exit deal.

Ma also held a private meeting with May on Wednesday.

May’s intervention on the Hinkley power plant, one of her first major decisions after taking power, raised the prospect that the national security-conscious former interior minister would change Britain’s strategy of courting Chinese investment in key energy, housing and transport infrastructure projects.

But May and senior colleagues used Ma’s visit to try to persuade China to put money into a series of infrastructure investments across northern England.

May said she wanted China to know that Britain was “open for business” as it prepares for life outside the EU.

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Editing by Tom Heneghan and William Schomberg